Exhibit 10.21
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR TRANSFERRED UNLESS
REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION SHALL BE AVAILABLE.
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE
SUBORDINATE TO ANY SENIOR INDEBTEDNESS ENTERED INTO BY THE
COMPANY AFTER THE DATE HEREOF, AND EACH HOLDER OF THIS NOTE
AGREES THAT THE INDEBTEDNESS EVIDENCED BY THIS NOTE SHALL BE
SUBORDINATE TO THE COMPANY'S SENIOR INDEBTEDNESS.
8% SUBORDINATED PROMISSORY NOTE
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$50,000.00 New York, New York
October 11, 1995
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation with its offices at 0 Xxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"Company"), hereby promises to pay to the order of XXXXXX X. XXXXXXXX, an
individual with his office at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(the "Holder"), the principal amount of Fifty Thousand Dollars ($50,000.00),
together with interest calculated from the date hereof in accordance with the
provisions of this 8% Subordinated Promissory Note ("Note"). Payments on this
Note are to be made at the Holder's address stated above, or such other address
as duly designated by the Holder, in lawful money of the United States of
America.
1. Payment of Interest; Rate. This Note shall bear interest on the
outstanding principal amount hereof at an annual interest rate of eight percent
(8%) (based upon a 360-day year), payable quarterly on October 15, January 15,
April 15 and July 15 of each year (each of such quarterly interest payment dates
being referred to herein as an "Interest Payment Date") commencing October 15,
1995. In the event that an Interest Payment Date is not a business day, the
Company shall pay to the Holder the interest payment on the first business day
following the applicable Interest Payment Date.
2. Payment of Principal. (a) Principal shall be payable on the Note in
one installment on October 11, 1997 (the "Initial Maturity Date"). On the
Initial Maturity Date, the
Company shall have the option ("Conversion Option") of not repaying the Note and
instead converting the outstanding principal amount on the Note into another
note in such outstanding principal amount ("Converted Note") payable to the
Holder. The Converted Note shall bear interest on the outstanding principal
amount at the annual rate of eight percent (8%) and shall mature five (5) years
from the date of its issuance ("Maturity Date"). Interest and principal shall be
payable on the Converted Note in twenty (20) equal quarterly installments.
(b) If the Company exercises the Conversion Option, upon its issuance
of the Converted Note to the Holder, it shall also issue to the Holder a
warrant, substantially in the form of Exhibit A hereto ("New Warrant"), to
purchase 12.5 shares of the common stock, $.01 par value per share of the
Company ("Common Stock"), at an exercise price of $2,000 per share, subject to
adjustment as set forth in the New Warrant. The New Warrant shall be exercisable
for five years and shall be in addition to the Warrants (as defined in Section 4
herein) issued pursuant to Section 4 of this Note.
3. Prepayment of Note; Rights to Purchase Additional Securities. (a)
Prior to the Initial Maturity Date (or the Maturity Date for the Converted
Note), the Company may prepay, without penalty or premium, the outstanding
principal amount of this Note, or the Converted Note, provided that any accrued
and unpaid interest is paid when this Note, or the Converted Note, is prepaid.
If the Company prepays the entire outstanding principal amount of this Note (and
accrued and unpaid interest) on or prior to October 11, 1996, Warrant A (as
defined herein) shall be canceled and returned to the Company by the Holder.
(b) Prior to the Initial Maturity Date (or the Maturity Date for the
Converted Note), if the Company consummates any equity or subordinated debt
financing ("New Financing"), the Company shall have the option to require the
Holder to convert the Note (or Converted Note, as applicable) into debt and/or
equity securities ("New Securities") that are being issued in the New Financing,
provided that the Holder receives in exchange for its Note (or Converted Note,
as applicable) New Securities on the same terms and conditions as any other
holder of New Securities.
(c) (i) If at any time while either of the Warrants or the New
Warrants remain outstanding and Section 9.6 of the Original Investment Agreement
(as defined herein) has not been terminated, the Company proposes to issue any
of its equity securities to any person (other than pursuant to a plan or
arrangement approved pursuant to Section 6.1 (a)(iv) of the Original Investment
Agreement, or as additional consideration to a financial institution that is not
an Affiliate of any Stockholder in connection with the making of a loan to the
Company (or its subsidiaries), or pursuant to a New Financing), the Holder shall
have the right to purchase, upon the same terms, a proportionate
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quantity of those securities (in the proportion that the number of shares of
Common Stock underlying the Warrants and the New Warrants, as applicable bears
to the total number of shares of the Company's Common Stock then held by all
stockholders); for this purpose, shares of the Company's Common Stock issuable
upon conversion of securities then held by all stockholders or upon exercise of
warrants then held by all stockholders shall be deemed to be then held by
stockholders. The provisions of this Section 3(c)(i) are not intended to be
duplicative with the provisions of Section 9.6 of the Original Investment
Agreement or with the provisions of Section 3 of the 8% Subordinated Promissory
Note dated August 31, 1995 from the Company to Holder in the original principal
amount of $50,000.
(ii) If at any time prior to the date the indebtedness evidenced by
this Note has been paid in full the Company proposes to issue any subordinated
debt financing (other than pursuant to a New Financing), the Holder shall have
the right to participate in such issuance of debt, upon the same terms, in a
proportionate principal amount (in the proportion that the principal amount of
subordinated debt held by the Holder bears to the total principal amount of the
subordinated debt of the Company then held by all holders); provided, however,
that this right shall terminate if not exercised in connection with the first
financing to which this Section is applicable. The provisions of this Section
3(c)(ii) are not intended to be duplicative with the provisions of Section 3 of
the 8% Subordinated Promissory Note dated August 31, 1995 from the Company to
Holder in the original principal amount of $50,000.
4. Warrants. Upon issuance of the Note to the Holder, the Company
shall also issue two (2) warrants ("Warrants") to the Holder, which Warrants
shall be designated "Warrant A" and "Warrant B" and shall be in substantially
the forms set forth in Exhibits B and C hereto. Each Warrant shall entitle the
Holder for a five-year period to purchase 6.25 shares of the Company's Common
Stock at an exercise price of $2,000 per share, subject to adjustment as set
forth in each Warrant.
5. Representations and Warranties. The Company represents and warrants
to the Holder (which representations and warranties shall be deemed material and
to have been relied upon by the Holder in its decision to purchase the Note)
that the representations and warranties made by the Company in Section 4 of the
Investment and Stockholders' Agreement dated December 21, 1994 ("Original
Investment Agreement") by and between Clearview Cinema Group, Inc., A. Xxxx
Xxxx, Xxxxx X. Xxxxx and CMNY Capital II, L.P., are correct in all material
respects as of the date of this Note ("Issuance Date") with the same effect as
though made in and as of such Issuance Date, except for those matters disclosed
in Exhibit D hereto. The representations and warranties set forth in Section 4
of the Original Investment Agreement are incorporated herein by reference as if
fully set forth herein.
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6. Covenants. The Company covenants to the Holder that it shall comply
with the covenants set forth in Section 6 of the Original Investment Agreement
as though such covenants were set forth herein. The covenants set forth in
Section 6 are incorporated herein by reference as if fully set forth herein.
7. Subordination. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Holder of this Note covenants and agrees,
that the indebtedness evidenced by this Note shall be subordinate and subject in
right of payment, to the prior payment of all Senior Indebtedness of the
Company, provided such subordination is reflected in a subordination agreement
by and among the Company, the Holder of this Note and the holder of the Senior
Indebtedness. The Holder of this Note agrees to enter into a subordination
agreement with the holder of the Senior Indebtedness.
(b) For purposes of this Section 7, "Senior Indebtedness" shall mean
the principal of, premium, if any, and interest (including any interest accruing
after the filing of a petition in bankruptcy) on and other amounts due on or in
connection with any indebtedness of the Company as defined in and arising under
any loan, credit, security or similar agreement with a bank, insurance company,
or other financial institution or affiliate created, incurred, assumed, or
guaranteed by the Company after the date of this Note, and, all renewals,
extensions, and refundings thereof, which by the terms of the instrument
creating or evidencing such indebtedness is expressly made senior to in right of
payment to, the payment of principal of and interest on the Note.
8. Default. Each of the following events shall Constitute an "Event of
Default" under this Note:
(a) the failure of the Company to pay when due any interest, principal
or any other sum under this Note, and such default shall remain uncured for a
five (5) business day period;
(b) the failure of the Company to observe or perform any covenant set
forth in this Note, the Warrants or Original Investment Agreement and such
default shall remain uncured for a twenty (20) business day period after notice
of such default from the Holder;
(c) the breach of any representation, warranty or covenant made by the
Company in this Note, the Warrants, or the Original Investment Agreement and
such default shall remain uncured for a twenty (20) business day period after
notice of such default form the Holder;
(d) the death, bankruptcy or insolvency of A. Xxxx Xxxx;
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(e) the Company shall cease operations or cease doing business as an
operator of movie theaters;
(f) A. Xxxx Xxxx shall no longer serve as President of the Company or
shall not be a principal stockholder of the Company;
(g) the Company shall (1) file, or consent by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy or insolvency law of any jurisdiction, (2)
make an assignment for the benefit of its creditors, (3) consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of itself or of any substantial part of its property, (4) be adjudicated
insolvent or be liquidated, or (5) take corporate action for the purpose of any
of the foregoing; or
(h) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Company, a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or if an order for relief
shall be entered in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidations of the
Company, or if any petition for any such relief shall be filed against the
Company and such petition shall not be dismissed within 60 days;
Upon the occurrence of any Event of Default, the unpaid principal amount of and
the accrued interest on this Note shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company.
9. Counsel Fees. The Company shall reimburse the Holder for its
reasonable fees and disbursements charged by its outside legal counsel, Xxxx &
Priest LLP, in connection with the preparation, negotiation, execution and
delivery of this Note and the transactions thereunder, and all other documents
delivered in connection therewith, provided that the aggregate amount of such
reimbursement shall not exceed $5,000. The Company also agrees to pay all
reasonable legal expenses related to any modifications, waivers, consents,
amendments, or enforcement, relating to the Note and Warrants.
10. Origination Points to Holder Upon Issuance of the Note. The
Company shall pay to the Holder origination points of two percent (2%) of the
original principal amount of this Note.
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11. Miscellaneous.
(a) This Note shall be construed in accordance with and governed by
the laws of the State of New York (without regard to its conflict of laws
principles).
(b) The Company agrees to remain and continue bound hereby
notwithstanding any extension or extensions of time of payment, and
notwithstanding any failure or omission to make presentment or demand for
payment of the Note or to protest it for non-payment, and hereby expressly
waives any and all presentment or demand for its payment and protest for time of
payment of it, or any part of it, or its non-payment or dishonor.
(c) Payments made on this Note shall be applied first to accrued
interest, then to other amounts which may be due (other than principal), and
then to principal.
(d) Notwithstanding anything to the contrary contained in this Note,
no interest shall accrue or be payable hereunder that is in excess of the
maximum amount permitted under the applicable law relating to usury. Any
interest that is in excess of the maximum amount permitted under the applicable
law relating to usury shall be applied to reduce the outstanding principal
balance hereof and shall be deemed to represent a prepayment of principal
hereunder.
(e) Upon an Event of a Default with respect to this Note, interest
thereafter shall accrue and be payable at 16% per annum. In the event this Note
is placed for collection, the Company shall pay all collection costs, including
attorneys' fees, in addition to all other amounts due hereunder.
(f) No course of dealing between the Company and the Holder or any
delay on the part of the Holder in exercising any rights hereunder shall operate
as a waiver of any rights of a holder hereof, except to the extent expressly
waived in writing by the Holder.
(g) This Note may not be modified or discharged except by an
instrument in writing executed by the Company and the Holder.
(h) This Note shall be binding upon and inure to the successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its President.
CLEARVIEW CINEMA GROUP, INC.
By:____________________________
Name: A. Xxxx Xxxx
Title: President
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Exhibits to 8% Subordinated Promissory Note
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Exhibit Number Descriptions
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A Form of New Warrant
B Warrant A
C Warrant B
D Exceptions to Representations
and Warranties
[Exhibits are not included, but will be provided by the Company upon request.]
